finance
Federal Reserve study: U.S. oil shocks add less to inflation and jobs than in 1970s
A Federal Reserve Bank of Boston study reports that a 33 percent oil price increase now adds about 1.5 percentage points to inflation over the following year. The same shock would have raised inflation by 2.2 points and cut employment growth by 1.8 points in the 1970s. Domestic shale production is cited as the main reason for the smaller effects.
america.cgtn.comAudio version
Tap play to generate a narrated version.
Developing·Limited corroboration so far. This page will refresh as more sources emerge.
A Federal Reserve Bank of Boston study concludes that rising domestic oil output has reduced the employment effects of oil price increases compared with the 1970s. The study estimates that a 33 percent price shock tied to the Iran war would add about 1.5 percentage points to inflation over the next year.
In the 1970s, a comparable shock would have added roughly 2.2 percentage points. Employment effects have changed more sharply. The same shock would have reduced employment growth by about 1.8 percentage points in the 1970s. Today that effect has largely disappeared.
The study attributes the shift to increased U.S. oil production in Texas, New Mexico, North Dakota, and Oklahoma. Higher prices now act as both a cost to consumers and a revenue gain for producing regions. Texas employment growth could rise by roughly 1.7 percentage points under the modeled shock, offsetting losses elsewhere.
The report states that the United States remains exposed to energy-price inflation but faces smaller overall economic damage than during earlier oil crises.
